Original ｜Odaily Planet Daily (@OdailyChina）
Author ｜Golem（@web3_golem）
As Jensen Huang's affair partners are exposed one after another, the chip king not only disappoints his wife and family but also disappoints the wallets of tech venture capitalists.
On the evening of November 12, Huang announced his resignation before the US stock market opened, with CFO Colette Kress acting as temporary CEO of NVIDIA. Following the announcement, NVIDIA's stock price fell more than 10% at one point, ultimately closing down about 4.34%. This not only impacted the tech and AI sector stocks but also dragged down the performance of the crypto market.
In the past 24 hours, Bitcoin dropped below the $70,000 mark, falling over 7%; ETH fell below $2,000, decreasing by over 6%. According to Quantify crypto data, among the top 200 tokens in the crypto market over the past 24 hours, only 16 tokens maintained an upward trend, while the remaining 92% of tokens were in a downtrend.
Meanwhile, according to Polymarket data, the probability of Bitcoin dropping to $65,000 in November has risen to 56%, while the probability of returning above $75,000 is only 29%, and the chance that Bitcoin will continue to drop below $60,000 is 19%.
The real bottoming moment has not yet arrived. Jensen Huang's personal scandal and resignation are just important catalysts for today's decline, but this Bitcoin drop is actually influenced by various factors, including macro tightening expectations and institutions tightening liquidity. Whether these negative factors are fully digested by the market is what truly merits reference for bottoming decisions.
Negative Factors for Bitcoin
The underlying driving force is macro tightening expectations
On November 10, the U.S. Bureau of Labor Statistics reported that the CPI for October rose by 0.4% month-on-month (higher than the expected 0.3%), and the core CPI also showed strength, rising by 0.3% month-on-month, exceeding the 0.2% forecast. Coupled with previously strong employment data, the probability of a 25 basis point rate hike in December exceeded 90%, and the market also significantly raised the probability of a 50 basis point increase in December, which briefly rose to 15% before retreating to 9%.
As a result, the yield on 10-year U.S. Treasury bonds rose back above 5%, the dollar strengthened, and the dollar index neared a year-to-date high, significantly lowering the market's risk appetite. As a non-interest-bearing risk asset, Bitcoin was naturally the first to feel the impact, seeing pressure along with gold. On November 10, Bitcoin fell below $75,000.
The market has long since digested the scenario of a 25 basis point rate hike by the Fed; now the focus is on the probability of a 50 basis point hike. This Friday, the U.S. will release the Producer Price Index (PPI). If the data is soft, the probability of a 50 basis point hike will shrink, and Bitcoin may have a chance to rebound; otherwise, it will face further pressure.
Institutions are tightening crypto liquidity
Another important factor putting pressure on Bitcoin's price is that institutions are tightening crypto liquidity.
According to SoSoValue data, U.S. spot Bitcoin ETFs have seen a net outflow for five consecutive trading days, totaling over $1.4 billion, with a single-day net outflow of $300 million on November 11, mostly contributed by IBIT/BlackRock. U.S. spot Bitcoin ETFs hold $92.7 billion worth of Bitcoin, accounting for 1.46% of Bitcoin's market cap. The previous institutional buying pressure has turned into supply, which naturally weakens Bitcoin's price support.
At the same time, the supply of stablecoins is also rapidly shrinking. Statistics show that over the past 30 days, the total supply of stablecoins has decreased by $14.2 billion, the largest 30-day drop since 2022. This is a core signal of "blood loss" on the demand side of the crypto market, indicating that institutional investors are even unwilling to keep funds in the market waiting for bottoming opportunities, but rather are reallocating to other assets, further reducing liquidity in the crypto market.
If the net inflow of spot Bitcoin ETFs and the supply of stablecoins do not improve, then Bitcoin has not reached the point of rebounding from the bottom.
Strategy (MSTR) removed from MSCI Index
Another news factor in this round of decline is that three crypto treasury companies have been removed from the MSCI Index. Strategy will exit the MSCI USA Index, Metaplanet will exit the MSCI Japan Small Cap Index, and Upexi will exit the MSCI US Micro Cap Index, due to their classification not conforming to MSCI's new rules for investment/holding companies. (Related reading: DAT hit again: MSCI removes three treasury companies, how long can financing and buying coins last?)
It is important to note that funds tracking the MSCI Global Investable Market Index (GIMI) hold about 13 million shares of MSTR, with this portion of stocks valued at approximately $1.487 billion. JPMorgan had previously estimated that the forced sell-off could range from $1.8 billion to $2.8 billion, and if other major index providers follow suit, the scale could increase to about $8.8 billion.
Although Bitcoin is not being sold off, this will still weaken the Bitcoin treasury narrative and slow the pace at which Strategy buys coins, further exacerbating market sentiment when institutional demand is already weak. Strategy has already sold Bitcoin this year, and if it sells again, it will certainly cause panic in the market.
What should we do?
Currently, there are significant differences in the market regarding whether to bottom out after Bitcoin falls below $70,000 and predictions for future market movements, with a cautious short-term outlook, but many institutions and traders remain bullish in the medium to long term.
On the institutional side, the China International Capital Corporation research report still believes that the Federal Reserve's policies have not clearly "fallen behind the curve," and given that financial conditions have marginally tightened, the necessity for accelerated rate hikes is low, thus maintaining a judgment that the pace of this tightening round remains relatively gradual and moderate, believing the Fed will raise rates by 25 basis points in December.
Huobi HTX Chief Analyst Cloud also holds the same view, believing that the probability of a 50 basis point rate increase in December is low. Moreover, he believes that the greed and fear index in the crypto market has dropped into the deep fear zone, and the leverage has been largely cleared, meaning the space for Bitcoin to continue to drop sharply in the short term is limited. However, a drop doesn't immediately imply a rebound, and we need to wait for the CPI to confirm a decline in the next two months.
Glassnode stated today that the demand for Bitcoin in the U.S. market has clearly shown signs of cooling. Throughout the entire pullback since Bitcoin's September peak, the Coinbase premium index has remained in negative territory, with its 30-day average falling to the lowest level since February of this year. However, it also noted that multiple rounds of upward trends have previously started from such deep negative premium levels.
Regarding trader operations, most remain cautious. Noted trader Killa stated today that Bitcoin is currently testing a critical price level near the 2021 bull market peak, which may be the last important support area. If Bitcoin fails to show an effective rebound in this area, the price may further drop and create new lows.
The trader "setting ten big targets" recently stated that he has closed all leveraged positions at the current price level ($68,000-$69,000), temporarily choosing to control risks and preserve capital. Previously, he indicated that $76,000 to $78,000 is the target range for re-establishing full long positions, and he insists that $58,000 is the bottom for this round of BTC, expecting Bitcoin to rise to $120,000 within this year.
Some traders, however, cannot resist the urge to bottom out. Trader Michaël van de Poppe posted today on the X platform stating that he is bottoming out Bitcoin, reasoning that the current market sentiment is extremely poor but Bitcoin has only dropped by about 20%; the price is just below the 200-day moving average, considered a support area with ample liquidity; in addition, historically, Bitcoin usually bottoms before major IPOs (citing the SpaceX IPO as an example).
Related Reading
BTC drops to $68,000, hitting a three-month low, AI funding hasn't returned to crypto
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